Company Background
BMW of North America (BMW NA) is one of the leading automobile manufacturers and marketers in the United States. The corporation was established in the year 1975 (Madlani and Ulvestad 12). Initially, the firm’s business model focused on the production of luxury and high-performance automobiles. In 1980, the firm began to import and distribute a wide range of motorcycles from the parent company in Germany. The firm distributed its first line of trucks in the region in the year 1999. Currently, BMW NA is headquartered in Woodcliff Lake, New Jersey. It has several manufacturing firms in different locations such as Nazareth and Port Jersey (Jefferson 8). The parent company began its distribution in the U.S. after winning distribution rights (Jefferson 12). To emerge successfully, the new firm focused on the changing needs of the targeted customers. The gathered information made it easier for the company to deliver first-class cars and trucks that met the needs of the targeted clients.
Within the past forty years, the company has managed to acquire and distribute superior cars to the greatest number of people. The firm has established the best relationships with different communities, distributors, and clients. The leaders at the company have always focused on technology, elegance, beauty, and utility (Madlani and Ulvestad 18). These values have continued to resonate with the wishes and expectations of the targeted customers. Unfortunately, the performance of BMW NA has been characterized by a wide range of challenges. For instance, policies focusing on air emissions, safety standards, and fuel economies have dictated the business models of many companies in the industry. BMW NA has been on the frontline to address the issues and deliver quality cars that meet the needs of the customers.
To become a leader in the automobile industry, BMW has come up with a powerful vision statement that guides every business process. The current vision for the company is “to become a successful manufacturer of first-class automobiles in the industry” (Madlani and Ulvestad 16). The vision is used as a model that empowers different stakeholders and employees to deliver quality care to targeted customers. BMW NA’s mission statement is “to remain the world’s leading manufacturer and provider of superior services and automobiles that support individual mobility” (Madlani and Ulvestad 5). With this kind of mission, every process is re-engineered to ensure premium cars are available to the greatest number of customers in the United States and Canada.
Several goals guide the company to empower targeted customers. The vision of the company is treated as a goal that should be taken seriously. This is the case because the firm implements and supports appropriate processes that can deliver premium automobiles (Madlani and Ulvestad 18). The firm empowers its stakeholders and employees to embrace the power of research and development (R&D). This strategy has defined the company’s business model.
BMW NA has unique values that dictate a wide range of practices. For instance, the firm believes strongly that the driver or customer should eventually receive an ultimate driving machine. The cars are designed in such a way that they deliver the intended driving pleasure. This value is promoted by the BMW Group’s ability to combine dynamic performance and sporting (Madlani and Ulvestad 19). The combination “delivers quality cars that win hearts and turn heads” (Jefferson 49). The issue of sustainability is also taken seriously as a core value at BMW NA.
External Analysis
BMW NA Industry Environment: Porter’s 5 Forces
BMW in America is currently operating in a competitive environment. The industry is currently dominated by various automobile manufacturers and distributors. The sector is also facing competition from companies that produce, market, and distribute motorcycles. Porter’s Five Forces framework can, therefore, be used to analyze the nature of this industry. The first attribute or force is the threat of new entrants (Madlani and Ulvestad 83). Lewin indicates clearly that the threat of newcomers in the automobile manufacturing and distribution sector is extremely low (17). This is the case because companies that want to invest in the industry will require a lot of financial resources. The industry is closely monitored and regulated by the government.
The second force is the bargaining power of buyers. The customers in this industry have high bargaining power. This is the case because they can purchase cheaper or superior cars. Consumers or buyers have access to information. These aspects explain why brand loyalty might change within a short period. The third force is the bargaining power of suppliers (Dawar 2). This power is extremely high because many suppliers have what it takes to dictate the future of the industry. The suppliers are limited thereby forcing different companies to meet their needs.
The fourth factor is the availability of substitutes. BMW’s industry is characterized by many cars and transportation options. However, the company is a leading manufacturer of luxury cars. The current economic conditions are also making it impossible for many people to purchase their favorite cars. These attributes explain why the impact of this force is medium (Dawar 3). The fifth force is a competitive rivalry. The level of rivalry is extremely high. This is the case because the existing firms are capable of competing directly and shifting customer loyalty.
Factors in the Macro-environment
There are various factors in BMW’s macro-environment. To begin with, political factors dictate the performance of many companies in the industry. The political stability in the USA supports the company’s business model. Some numerous policies and regulations must be fulfilled by companies in the industry (Beatty and Samuelson 12). The social factors experienced in the country affect BMW’s performance. For instance, many people today want to lead better lifestyles. These changes are making it easier for BMW NA to market its products.
The economic situation experienced in the United States dictates the firm’s performance. The current economic growth will support targeted goals. However, a Trump presidency might result in numerous economic changes that might affect the firm’s profitability. Environmental factors are also impacting the company’s model. Issues such as sustainability and economic protection have gained attention in the industry (Dawar 3). BMW must produce fuel-efficient and sustainable cars to remain competitive. The legal factors are also transforming the industry (Madlani and Ulvestad 56). The companies in the industry must focus on consumer protection, safety, workplace, compensation, environmental conservation, and sustainability laws.
Opportunities and Threats
The industry is characterized by several opportunities that can make BMW NA successful. The current technological changes and social media networks can promote the company’s marketing strategy. More customers are currently in need of superior and safe cars. Modern technologies will result in the development of elegant and premium cars (Dawar 3). However, some threats such as increasing industry rivalry, changing economic times, numerous regulatory requirements, and availability of cheaper (but quality) cars in the market are evident in this company.
Internal Analysis
BMW’s value chain activities are attributable to its competitive advantage. To begin with, there are primary activities that ensure quality automobiles are available to the targeted customers. The concept of inbound logistics is taken seriously to add value to the firm’s performance. This goal is achieved by minimizing logistical expenses. Sourcing of specific raw materials is done competently to promote quality. The major suppliers are located in convenient locations to reduce costs and minimize disruptions throughout the supply chain. The second “category of primary activities is operations” (Lewin 38). The firm has distinctive operations focusing on motorcycles, automotive, and financial services. Each operation is managed systematically while at the same time focusing on a common goal.
Outbound logistics are executed professionally. BMW Group has come up with a unique distribution network that comprises of many dealerships (Dawar 8). Such dealers monitor the needs of the targeted customers and develop adequate channels to achieve targeted goals. Marketing is supported using powerful strategies. Movies, popular culture, and advertisements are used to ensure the marketing process is implemented successfully (Beatty and Samuelson 49). The issue of service defines the effectiveness of BMW’s business model. From the very beginning, the needs of the customers are considered to engineer and market quality products using superior service delivery channels. Whenever undertaking the above primary activities, support functions are implemented such as the use of technology, procurement, provision of effective HR practices, and construction of adequate infrastructure (Madlani and Ulvestad 102). That being the case, the core functions undertaken at BMW have led to a competitive advantage in the industry.
The above activities of the value chain are managed properly. Research and development (R&D) are embraced to ensure new ideas and concepts capable of revolutionizing the products are developed (Lewin 72). The marketing process is informed by the changing needs and expectations of the targeted customers. Consequently, the firm has managed to realize most of its business potentials.
From this analysis, it is agreeable that some unique strengths and weaknesses define BMW NA’s internal processes. The first strength is the use of effective HR practices. These approaches make it easier for managers to address the emerging needs of the employees. HR managers implement powerful models that have the potential to promote performance. The second strength is the company’s business model. Every activity is designed in such a way that it supports the company’s vision and mission. The R&D team presents powerful concepts and products that can fulfill the needs of the customers (Beatty and Samuelson 41). The firm’s infrastructure, superior designs, and technological resources continue to support its business performance. The workforce is diverse thereby promoting innovation.
BMW NA is associated with several weaknesses that might affect its business performance. For example, the company has been relying on specific suppliers to achieve its business goals. Unfortunately, the occurrence of disruptions in the supply chain affects business performance. Since the firm is based in America, the issue of diversity has not been taken seriously (Lewin 87). A new strategy aimed at addressing this problem has the potential to support the firm’s business model. The firm has been concentrating on several superior cars. Although this approach has led to a competitive advantage, it has also become a weak point that is used by the other players in the industry to deliver cheaper but quality automobiles.
Business-Level and Corporate-Level Strategy
BMW is one of the multinational firms whose business strategies have led to a differentiation strategy. Using the approach, the firm implements a powerful model that has the potential to promote performance. The corporation concentrates on the best measures to produce superior, unique, and elegant cars that resonate with the expectations of the customers. The firm has developed a unique business model that focuses on various competitive advantages such as effective distribution, production of superior products, and promotion of sustainable business practices (Lewin 92). To achieve this goal, the firm takes the issue of innovation seriously. The R&D team uses feedback and reviews from analysts and customers to come up with revolutionary cars that can compete successfully in the market. Modern technologies are used to ensure the targeted products meet the changing needs of the customers. By focusing specifically on the luxury market segment, BMW has managed to implement potent programs that can deliver positive results.
BMW has differentiated itself from the major competitors in the industry by using cutting edge technologies. The R&D team has been on the frontline to ensure the changing needs of the customers are met. Continuous improvement is also taken seriously to promote sustainable growth and performance (Lewin 101). In terms of performance and product, BMW uses its resources to produce premium cars that revolutionize the experience of the driver.
Unfortunately, the differentiation strategy embraced by BMW NA has led to several challenges. For instance, BMW’s business model faces a major challenge from different competitors such as Mercedes Benz, Toyota, and Volkswagen. The reduced price phenomenon is a potential risk that can put BMW out of business (Madlani and Ulvestad 126). This is the case because these competitors have the potential to launch premium cars that can affect BMW’s performance. Modern technologies are currently making it easier for different companies to come up with new cars every day (Jefferson 37). This development can make BMW’s differentiation strategy unsustainable.
Business ethics is another issue that is taken by companies that want to remain competitive in the industry. BMW has been focusing on the best strategies to promote the idea of sustainability. The firm implements powerful measures to ensure its logistical operations do not affect the natural environment. The produced cars are designed in such a way that they meet the minimum emission requirements (Hwee 30). The firm goes further to support the welfare of the surrounding communities. These measures have continued to support the welfare of many customers. Shareholder value has also been maximized through the use of adequate CSR practices. The short-term goal has been to address the needs of these stakeholders. The long-term goal is to create a sustainable business model while at the same time safeguarding the natural environment.
Recommendations
BMW NA is a leading company that imports and distributes premium cars to its customers in North America. The company’s business model is guided by its mission and vision statements. The current environment indicates that BMW has the potential to pursue its business goals and eventually realize its business potential. However, BMW NA faces stiff competition from several leading players companies in the industry such as Mercedes-Benz, Audi, and Volkswagen. Toyota and General Motors (GM) continue to pose numerous challenges to the company’s business model (Hwee 31). The company’s differentiation strategy is threatened by different firms that are currently providing superior automobiles in different parts of the world.
The current situation should, therefore, be a wakeup call for BMW NA to remain profitable and competitive in its industry. The first recommendation is to consider the emerging concerns and ethical needs of many stakeholders. This means that the concept of CSR will be taken seriously to attract more customers. The firm can also identify the major technological changes experienced in the world today (Jefferson 42). This approach will ensure the marketed vehicles are superior and capable of empowering the targeted clients.
BMW NA can undertake numerous studies to monitor the emerging trends in the American automobile market. The collected information will be used by the firm “to secure a competitive share in the market segment” (Jefferson 71). The company can also implement powerful measures and models that have the potential to improve efficiency and minimize operational costs (Hwee 31). BMW NA can engage in R&D to promote emission reduction (Dawar 7). Environmental risks and concerns should be addressed to ensure the company’s business model improves the trust of every customer. The collaboration with different marketers and dealerships in North America will make it easier for BMW NA to become the pacesetter in the automobile industry.
Works Cited
Beatty, Jeffrey, and Susan Samuelson. Legal Environment. Cengage Learning, 2013.
Dawar, Niraj. “When Marketing is Strategy.” Harvard Business Review, vol. 1, no. 1, 2013, 1-14.
Hwee, Eileen. “Building & Sustainability Strategy: Bayerische Motoren Werke (BMW) – Automotive Industry.” TMC Academic Journal, vol. 10, no. 1, 2015, pp. 29-46.
Jefferson, Marilynn. From Whence We Came. Author House, 2014.
Lewin, Tony. The BMW Century: The Ultimate Performance Machines. Quarto Publishing House, 2016.
Madlani, Jalpesh, and Jens Ulvestad. “A Fundamental Valuation of the BMW Group.” Copenhagen Business School, vol. 1, no. 1, 2012, pp. 1-170.